Problem 8-38 Variable Costing and Absorption Costing Income Statements; Reconciling Reported Operating Income (LO 8-2, 8-3, 8-4) Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $35. The variable costs of production for one case of cans are as follows: Direct material Direct labor Variable manufacturing overhead Total variable manufacturing cost per case $ 9.00 3.50 8.00 $20.50 Variable selling and administrative costs amount to $0.50 per case. Budgeted fixed manufacturing overhead is $552,000 per year, and fixed selling and administrative cost is $46,500 per year. The following data pertain to the company's first three years of operation. Planned production (in units) Finished-goods inventory (in units), January 1 Actual production (in units) Year 1 Year 2 Year 3 92,000 92,000 92,000 29,000 92,000 92,000 92,000 Sales (in units) 92,000 63,000 106,500 Pinished-goods inventory (in units), December 31 0 29,000 14,500 Actual costs were the same as the budgeted costs.